CENVAT Credit on Director Sitting Fee.

[Pradeep Jain]

Sir,

 

Please let us know that ' CENVAT Credit is available on Director Sitting Fee. OR are we entitled to avail CENVAT Credit on Director Sitting Fee.

Wee seek your legal opinion.

Regards

 

Pradeep Jain

[YAGAY andSUN]

Yes, CENVAT credit will be available on Director's sitting fees.

[Dr. Sanjiv Agarwal]

You can utilise cenvat credit on service tax paid on director's fees only if you are providing output taxable services. Thus, in case of trading companies, it may not be possible.

 

Sanjiv Agarwal

Jaipur

[YAGAY andSUN]

Trading is an exempted service, no CENVAT credit is allowed such services.

[CASeetharaman KC]

Cenvat Credit would be available for service tax paid on Directors sitting fees. Since the service tax is payable under reverse charge mechanism by the service reciever or in this case the company, the service tax needs to be paid in cash and CENVAT can be availed on the basis of the payment challan

[Dr. Sanjiv Agarwal]

Yes provided it is an eligible input service for you. Cenvat can be claimed even under reverse charge but service tax on director's services under RCM can not be paid thru cenvat but in cash only

 

Sanjiv Agarwal

[Guest]

sir

 

let us know any notificaiton in this regard to be evident to avail cenvat cr

[CASeetharaman KC]

Please refer to proviso to Rule 4(7) of the Cenvat Credit Rules , 2004 which is reproduced as below:

 Provided that in case of an input service where the service tax is paid on reverse charge by the recipient of the service, the CENVAT credit in respect of such input service shall be allowed on or after the day on which payment is made of the value of input service and the service tax paid or payable as indicated in invoice, bill or, as the case may be, challan referred to in rule 9:

[VINOD Pawar]

But Here the question probably would be whether Directors Sitting fee would qualify for being treated as Input Service. 

It is definately not directly related to any output service. It is not specifically mentioned in Included Services. Not specifically excluded as it can neither be regarded as personal services nor be regarded as provision for employee benefits. 

 However, in my personal opinion, it may be treated as Legal consultancy services being rendering of services relating to any branch of Law ( statutory obligation to adhere to the provisions of Corporate Laws) . 

[Dr. Sanjiv Agarwal]

Yes, it will be eligible as an input service.

[CS RAHUL AGARWAL]

But sir under what head exactly we will classify directors service as input service as to avail CVC ??

Further, department is raising objection in audit observation and demanding ST on directors remuneration as shown in financials without making any difference in the capacity of such director i.e Even remuneration paid to M.D who is wholetime director in terms of companies act 2013 demand notices are issued and even comissioner is not agreeing with submissions and hence confirmed demand including interest.. Kindly throw light on any decided ruling of court / tribunal (if any) with your esteemed expertise

AI Summary

Debate on CENVAT Credit Eligibility for Director Sitting Fees Under Rule 4(7) of Cenvat Credit Rules, 2004 A forum discussion focused on whether CENVAT credit can be availed on Director Sitting Fees. Participants debated the eligibility of such fees as input services for CENVAT credit, especially under the reverse charge mechanism. It was noted that CENVAT credit is possible if the company provides taxable output services, but not for trading companies, as trading is considered an exempt service. Some contributors highlighted the need for payment in cash under the reverse charge mechanism and referenced Rule 4(7) of the Cenvat Credit Rules, 2004. The discussion also touched on the classification of director fees as input services and related legal challenges.